CFPB Knocks Out Another Scam

Yesterday, the Consumer Finance Protection Bureau put another credit repair outfit out of business. This was National Credit Advisors. These folks claimed that you can use them to “free yourself from bad credit.”

According to the Consumer Finance Protection Bureau, they collected $20 million from 50,000 consumers over a three year period. And accomplished almost nothing. (They promise that “One of our certified credit analysts will review your credit report with you and provide a customized in-depth credit evaluation.” Which boils down to nothing.)

In addition to agreeing to go out of business, although the website is still up today, National Credit Advisors agreed to pay a fine of $150,000. Not much if they scammed people out of $20 million.

Three signs of a scam

Looking at their website, I see all three earmarks of a scam.

First of all, they are far away. Sherman Oaks, California. Why do people trust somebody they never heard of in a city far away? I don’t know, but people do.

Second, they don’t show their face. National Credit Advisors does not give you the name, or picture, of the people behind it. It seems like scammers never do.

Third, they don’t have a real address. On their website, National Credit Advisors lists their address as 13636 Ventura Blvd. If you Google 13636 Ventura Blvd, Sherman Oaks CA, it’s a UPS store! Obviously their “certified credit analysts” aren’t working there at the UPS store. From that, you gotta suspect those analysts really aren’t anywhere.

What’s the Lesson?

If you need to protect your legal rights, see a lawyer! I know lawyers are expensive. But not as expensive as sending money to a scammer that just makes your problem worse. And when I say “see” a lawyer, I mean sit down face to face, with someone in your community who takes the time to understand your problem. (Someone who is licensed by your state Supreme Court. And who has a location where you can send the sheriff if they just take your money and don’t do anything.)

Upright Law on trial in Roanoke Bankruptcy court

Trial is set on September 25, 2017, for Upright Law, at the bankruptcy courthouse in Roanoke VA.

The US Justice Department, through the Office of the United States Trustee, is asking that Upright be banned from accepting cases in Virginia. They are also asking for refunds for fees that their clients paid. The government claims that Upright engages in various unethical practices.

You can read the government’s complaint, here Robins v Upright Law. And here’s Upright Law’s answer. Answer. Here’s a link to news coverage of this case.

Here’s a picture of the building in Chicago where Upright Law has its headquarters. Virginia is one of at least five states where cases against Upright Law are pending. It’s an Illinois law firm, with its main office in this building, in Chicago.

Upright Law assigns cases to “limited partners” in states around the country. You can read more here. And here.

Bankruptcy and Gumption

Most people come to talk to me about bankruptcy have been putting it off for years. People want to protect their “good credit” when all they are really doing is piling up bad credit. People worry that filing bankruptcy is “not how they were brought up.” They think they are better than Donald Trump, who used the bankruptcy law to get richer.

Some men, especially, are too embarrassed to ask for help.

For all those reasons, when people come to talk to me about bankruptcy, a lot of them a just exhausted. They want to pay their lawyer bill, sign their papers and be done.

For a lot of people, it’s not that easy.

Dave Carmen

Dave Carmen came to see me June 14. He had moved to this area to take a substantial Federal job promotion. He started to work at the new job, January 3. His wife joined him and started working here in March.

He had hoped with the new job they would be able to handle their debt load; but like many people they had not allowed for the high cost of living in Northern Virginia.

I made notes on what Dave told me and we went over his budget, together. “There’s a lot of income here, but I’ll try to get you qualified on the long form.” I needed to do more computer work, told Dave to come back Monday June 19.

I told Dave on June 19 there was good news and bad news. The good news, was really good. We could go ahead with Chapter 7 bankruptcy in June, and eliminate more than $50,000 in card cards and finance company loans. The bad news? He would lose eligibility in July!

(Why would Dave lose income eligibility in July? Chapter 7 bankruptcy income eligibility is based on the past six months, ending a month before the papers go into the court. We needed December, when he was on his old job and his wife wasn’t working, to get our six month average down low enough. In July, December would drop out of the average and the income would just be too high. Remember he had gotten a big raise starting January.)

We had twelve days to get his Chapter 7 bankruptcy done. Immediate next step Dave needed to identify an additional $600 a month in expenses—I told him where I thought his budget was too low, based on what I know about him and his family. I needed it by tuesday, June 27 at the latest. I had no doubt he could do it.

Tuesday June 27 came around and I hadn’t heard from Dave. Now we are into July, and it’s too late. Dave will have to pay back $54,000 that he can’t afford. Pay back $54,000 that we could have eliminated two weeks ago.

Dave had run out of gumption. The years of battling with the creditors, the stress of moving his family and the new job, he was worn out. He needed a couple more hours of hard work to take an enormous burden off himself and his family; and he just didn’t have it in him.

The Purpose of the 2005 BAPCPA Bankruptcy Law

The 2005 BAPCPA Bankruptcy law was supported in Congress by people who claimed there was widespread fraud and abuse in the bankruptcy system. Studies in the ten years after didn’t show any of that. The statistical impact of BAPCPA is seen in the “substantial increased access costs.” Filing bankruptcy is harder and more expensive. That was probably the real purpose of the bank lobbyists who drafted the law.

The 2005 bankruptcy law is filled with “gumption traps.” Rinky dink requirements that are designed to get you to give up.

Gumption. In America, if life knocks you down, we get back up.

President Trump says knowing how to use the bankruptcy laws is a “tremendous thing.” (Love him or hate him, most people would agree President Trump has plenty of gumption.)

If you are in financial trouble, please come to see me—or another experienced bankruptcy lawyer—before all your gumption is gone. When you consider bankruptcy, your opening to a better life—a new start and a clear field—is right in front of you. You just need a little more effort to take control of your life, again.

Supreme Court Knocks a Hole in the Fair Debt Collection Practices Act

Starting now, debt buyers, like Midland, Portfolio Recovery, and Cavalry are free of the regulations under the FDCPA. Here’s my list of the top ten unfair and harassing tactics that are now LEGAL for debt buyers.

Call you 24 hours a day

Call friends and family

Call you at work after you tell them you’re not allowed to get calls at work

Call you after you told them to call your lawyer.

Publish your name and address

Sue you in the wrong county

Add fees that were not in your contract

Take you to court on debts that are legally expired under the statute of limitations

Threaten criminal action that can’t legally be taken

Threaten to put false information on your credit report.

And more. If you write and tell them you are disputing the debt, they are free to ignore your dispute and keep trying to collect.

What Changed?

The Fair Debt Collection Practices Act was passed in 1977. It says debt collectors are companies who collect debt owed to another. So when Midland—who you never heard of—calls you on a debt they say you owed to Citibank, are they collecting debts owed to another. Right?

No! said a unanimous Supreme Court. Once Midland buys the debt, they are no longer collecting for another. They are collecting their own debt.

If you, or I, or most judges, would look at the FDCPA, we’d see the financial world divided into two groups.

The term “creditor” means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.

The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.

Is Midland a creditor? They did not extend credit to you and the debt was transferred to them ”for the purpose of facilitating collection of such debt… ”

Oh but they are! There’s that “for another” at the end of the definition of creditor. Once your debt’s been assigned or transferred to Midland, they are not collecting for another. So, they are just a creditor.

That interpretation means the second half of the definition of creditor, everything after the word “but,” never covers anybody; but oh well, said the Supremes. The Supremes agreed that debt buyers had outsmarted Congress, but that’s the way the world works. “Constant competition between constable and quarry, regulator and regulated, can come as no surprise in our changing world.” Henson v Santander (2017).

How Soon Will Things Get Bad?

Can we expect round the clock debt buyer phone calls starting next weekend? Three things might slow them down.

The “principal purpose” clause might still protect you. Santander, the debt buyer in the Supreme Court case, makes car loans. The Supreme Court said nobody tried to argue that the purpose of Santander was collecting debts—because they were in the business of making car loans. Is the purpose of a debt buying business the collection of debts? We need some consumer friendly judges to say, of course. (But, Midland, Portfolio and Cavalry all say their business purpose is to help consumers resolve their debt.) Don’t know how long it will take to get some good decisions from friendly judges, but I do know it will NOT start in Virginia.

The debt buyers need to check out all fifty state laws. Some states have copied, or strengthened, the FDCPA. (California is one example.) The debt buyers will need to check each state before they get too carried away with their new freedom. (Knowing Virginia, here will be one of the first places they’ll determine they don’t have to worry about any state laws.)

Maybe Congress will help. After Richard Nixon and the Watergate scandals, Democrats in Congress were very strong and they passed the FDCPA, FCRA and other important consumer protections. Will Congress and the White House change parties in 2020? We have to wait and see. Maybe the debt buyers will take it easy until then.

The Supreme Court knocked a hole in the Fair Debt Collection Practices Act.

Bankruptcy Protections Are Still There

Asking creditors to stop calling you are work, and stop calling your family, probably isn’t going to work any more. So if you don’t want everybody you know involved in your financial problems, talk to a bankruptcy lawyer—before the debt buyers start to call.

Robert Weed has the best rate of bankruptcy dismissed in Northern Virginia

Just finished checking on the number of my law firm bankruptcy cases dismissed the first three months of this year. (“Dismissed” means thrown out; the opposite is “discharged” which means successfully completed.)

We had 4 dismissals and 90 cases filed—that’s 4.4%. One other lawyer in the top ten, Robert Brandt, was at 5%. How does that compare?

One very busy bankruptcy lawyer around here had a dismissal rate of 40%—ten times (!) what mine was. The next busiest guy’s was “only” 24%. His cases were six times (!) more likely than mine to be thrown out. The next six of the top ten also had a 24% dismissal rate.

Every case is different; sometimes you want a dismissal. Past performance is no guarantee of future success. But the differences between lawyers are really big. Two lawyers of the top ten have dismissal rates of 5% and 4.4%. The next closest, Michael Sandler, is at 16%. The rest are from 20% up to 40%.

Robert Weed has the lowest rate of bankruptcy dismissed in Northern Virginia. Here’s the chart for January – March 2017.

It’s been this way for years.

I ran the same numbers back in 2012. We were at 4% back then, too. You can read more, here.

After Bankruptcy: Tammy Gets A Car Loan at 4.48%

The same week that her bankruptcy was discharged, Tammy got a car loan at 4.48%.

Now I sure don’t suggest trying to buy a car the same week your bankruptcy is over. But Tammy had no choice. Three weeks before her car was totaled in a rear end accident; she needed a way to get to work.

Still, 4.48% is amazing. Here are some of the reasons Tammy was able to get it.

1. First, she shopped. The dealer tried to get her into car loans around 8% and she told them they had to do better.

2. Second, Tammy had steady income. She works in law enforcement. No danger of missing a paycheck.

3. Third, she had never been late on a car payment.

4. Fourth, she came to see my while she was still current on nearly all of her debts.

5. Fifth, she had $1500 to put down.

Tammy came to see me while her credit cards were still current. That’s why she had good credit for a car as soon as her bankruptcy was over.

Why am I telling you this? Because most people think bankruptcy is the worst thing that can happen to your credit. That’s just NOT true. Charge offs and collections are just as bad. And if your debts go out of control, those charge offs and collections will keep mounting up, every month.

Filing bankruptcy stops all that. One time, and it’s over.

Tammy knew what most people don’t know. Putting off bankruptcy just makes it harder and harder to get back to good credit. Putting off bankruptcy does NOT protect your “good credit.” Putting off bankruptcy piles more and more bad credit that’s harder and harder to get out of.

So, look down the road. Are your credit card payments going to be impossible in the next couple months? Then come to see me NOW. Let’s file your bankruptcy BEFORE your credit is wrecked. You’ll be amazed at how soon you are back to good credit again.

Getting good credit is one of the five ways bankruptcy gives you a fresh start. Click here to see all five.